#23 The New New Thing A Silicon Valley Story

In the podcast, the host and guest discuss the enigmatic and influential figure Jim Clark, whose personality and relentless pursuit for change and innovation shaped Silicon Valley. Clark, a high school dropout turned billionaire, founded several pivotal tech companies, including Silicon Graphics and Netscape. His impatience and disdain for mediocrity drove him to amass wealth and challenge the status quo, embodying the spirit of the "new new thing"—a concept from Michael Lewis's book, which explores the relentless quest for groundbreaking technology. Despite his successes, Clark's dissatisfaction propels him forward, with his past hardships fueling a continuous pursuit of proving others wrong and a desire to surpass the wealth of contemporaries like Larry Ellison. His story illustrates the paradox of an unhappy optimist, whose achievements are driven by a deep-seated need for change rather than contentment.

• Jim Clark's character traits created significant changes in the lives of people around him.
• He was restless and constantly driven to change things he perceived as needing improvement.
• Clark is known for creating Netscape and contributing to the Internet boom and the subsequent economic frenzy.

"The quirks on the man's character sent the most fantastic ripples through the world around him, often starting with the best intentions or no intentions at all."

This quote emphasizes the profound and often unintended impact of Jim Clark's character traits on the world.

• Clark's background was humble; he grew up poor and was a high school dropout.
• Despite his beginnings, he amassed a fortune in the billions through his ventures.

"Maybe somewhere in the footnote it would be mentioned that he came from nothing, grew up poor, dropped out of high school, and made himself three or $4 billion."

The quote highlights the contrast between Clark's modest origins and his eventual financial success, suggesting it might be a lesser-known aspect of his story.

• The book "The New New Thing: A Silicon Valley Story" is discussed, written by Michael Lewis, a highly regarded author.
• The book captures the essence of Silicon Valley's culture and the unique personalities that drive it.

"Which is the new new thing, a Silicon Valley story. It's by, I would say, the best storyteller alive."

This quote indicates the book's subject and the esteem held for the author, Michael Lewis.

• Jim Clark is considered one of the most eccentric subjects covered in the podcast.
• The book focuses on a specific period in Clark's life, revealing much about his personality and influence.

"And Jim Clark may be the most eccentric, definitely one of the most eccentrics of all the characters that we've covered on the podcast so far."

The quote emphasizes Clark's unique and unconventional nature as a central theme of the book and podcast discussion.

• The concept of the "new new thing" involves seeking out ideas or technologies that are on the verge of commercial viability.
• The search for the new new thing is not just about technical and financial skills but also about timing and the ability to recognize potential.

"The new new thing is a notion that is poised to be taken seriously in the marketplace. It's the idea that is a tiny push away from general acceptance, and when it gets that push will change the world."

This quote defines the "new new thing" as an idea close to widespread recognition and poised to instigate significant change.

• Economic progress relies on individuals who are uncomfortable with comfort and constantly seek innovation.
• Progress in capitalism is not orderly but is driven by disruptive and unpredictable forces.

"Progress does not march forward like an army on parade. It crawls on its belly like a gorilla."

The quote metaphorically describes the unpredictable and ground-level nature of true economic progress.

• Jim Clark's life had a structure akin to an adventure story, filled with uncertainty about what would happen next.
• Engineers were predicted by Thorstein Veblen to seize economic power due to their understanding of technology.

"That's happening right now, he said, right here in the valley, the power is shifting to the engineers."

This quote reflects Clark's agreement with Veblen's prediction that engineers are gaining economic power in Silicon Valley.

• New growth theory, developed by economist Paul Roemer, posits that wealth comes from innovation and imagination.
• The theory suggests that societies should encourage nonconformity and risk-taking to foster wealth creation.

"New growth theory argued in obtruse mathematics that wealth came from the human imagination. Wealth wasn't chiefly having more of old things, it was having entirely new things."

The quote summarizes new growth theory's core idea that true wealth generation stems from creating entirely new concepts or products.

• Silicon Valley's history is divided into two parts: building better machines and creating new concepts for existing technology.
• The shift to conceptual innovation led to a redefinition of what is considered useful work.

"At some point in the early 1990s, the engineers had figured out that they didn't need to build new computers to get rich. They just had to cook up new things for the computers to do."

This quote marks the transition in Silicon Valley's focus from hardware to software and conceptual innovation.

• Clark was unique in making the transition from traditional engineering to the conceptual innovation that defined Silicon Valley's second part.
• His personality was such that interacting with him felt like being part of his dynamic life.

"You didn't interact with him so much as hitch a ride on the back of his life."

The quote conveys the experience of being around Jim Clark as one of being swept up in his fast-paced and influential life.

• Jim Clark is recognized for his ability to continuously reinvent himself.
• His talent for staying 'new' contrasts with his peers in Silicon Valley who grew old.
• Clark's presence and influence in Silicon Valley are seen in various landmarks and companies.

This activity was Jim Clark. This was due not so much to Clark's success as to his talent for self reinvention.

The quote highlights Jim Clark's exceptional ability to reinvent himself, a characteristic that sets him apart from others and contributes to his ongoing success and relevance in Silicon Valley.

• Clark's influence is seen in the establishment of significant tech landmarks and companies.
• He contributed to the creation of a new department at Stanford University called biocomputing.
• Clark's geometry engine at Xerox PARC was a transformative invention in computing.
• He founded Silicon Graphics and influenced the creation of other companies like Sun Microsystems.
• His founding of Netscape led to the birth of many Internet companies, such as Yahoo and eBay.
• Clark attempted to revolutionize the US healthcare industry with a new venture.

Clark's ubiquity was reflected in the landscape beneath us. Every significant landmark below bordered on his life.

This quote emphasizes the extent of Clark's influence on Silicon Valley, with his work and ventures being closely associated with many of the region's key technological developments and institutions.

• Clark is driven by a need for constant motion and change, which has been a key factor in his success.
• He equates change with wealth and sees impatience as a commercial virtue.
• Clark's focus on the future and new ideas marks his entrepreneurial spirit, distinct from the clichés of other business leaders.
• His lack of interest in the past and preoccupation with future possibilities define his approach to life and business.

Clark's inability to live without motion and change had gotten him to where he was in his world.

The quote captures the essence of Clark's restlessness and his constant pursuit of transformation, which has been pivotal to his achievements.

• Clark shows little interest in his past, focusing instead on the future.
• He is not sentimental, with little in his home to indicate his history.
• A box of collected items from his past reveals a newspaper clipping that highlights his rebellious youth and unlikely success story.

The few times I asked him directly how he got from there to here, which was becoming clear, was the same as asking how the modern world had gotten from there to here, he would offer some perfunctory reply and wave me away. That's boring, he'd say. When I pressed, he might say, that's the past.

This quote illustrates Clark's disinterest in discussing his past, suggesting that he finds it unimportant compared to his current and future endeavors.

• Clark's early life was marked by rebellion and academic struggles.
• His expulsion from high school and subsequent enlistment in the Navy were turning points.
• The Navy's misinterpretation of his multiple-choice test results led to an unexpected path.
• Clark's natural aptitude for math was discovered in the Navy, leading him to pursue higher education.
• His drive for success was fueled by a desire for revenge against earlier humiliations.

In the Navy, Clark said, he learned that his desire for revenge could lead to success. He was propelled in the classroom by his anger about the humiliation he'd suffer at sea.

The quote reveals how Clark's motivation for success was driven by a desire to overcome past humiliations and prove his capabilities, which played a significant role in his academic and professional achievements.

• Clark started his entrepreneurial journey at the age of 38, which challenges common beliefs about the correlation between youth and success in building companies.
• His transformative moment came after personal setbacks, leading to a newfound determination to achieve something significant.
• Clark's story exemplifies that significant success in entrepreneurship can occur later in life.

He tried to explain this extraordinary leap in his career from 38 year old unsuccessful college professor with a warning label on his forehead to a founder of a multibillion dollar corporation.

This quote describes the dramatic shift in Clark's career trajectory, beginning at an age when many might not expect such a significant change, and highlights the possibility of achieving entrepreneurial success at any stage of life.

• Clark foresaw the need for Silicon Graphics to compete with personal computers by creating cheaper machines.
• His emotional investment in foreseeing and addressing future problems set him apart from his peers.
• Clark's strategy to avoid the innovator's dilemma involved entering mass markets to generate substantial wealth.

I was saying, God damn, we're out of our minds, says Clark. I was so worried about the pc. I was adamant that we had to build a cheap computer to compete with the personal computer.

The quote reflects Clark's strategic thinking and his foresight in recognizing the necessity for Silicon Graphics to adapt to the evolving technological landscape by competing in the personal computer market.

• Silicon Graphics (SGI) was focused on producing high-end, expensive workstations.
• Jim Clark believed that for SGI to succeed, it had to be willing to disrupt its own high-cost product lines with lower-cost alternatives.
• Clark recognized the difficulty in a company actively undermining its own successful products.
• He was prepared to be the agent of this self-disruption and wanted SGI to embrace this philosophy.

"Clark thought that silicon graphics had to cannibalize itself. For a technology company to succeed. He argued, it needed always to be looking to destroy itself. If it didn't, someone else would."

This quote highlights Clark's belief in the necessity of self-disruption for a tech company's success. He understood that if a company doesn't innovate and potentially disrupt its own products, competitors will.

• Jim Clark left SGI to pursue new ventures.
• He partnered with a young Mark Andreessen, who was a computer science student and future successful founder and VC.
• Andreessen had created software that was appropriated by the University of Illinois, which he believed they would fail to commercialize effectively.
• Clark realized the potential of the internet, likening it to the personal computer in 1985.
• Clark and Andreessen, along with Andreessen's college friends, created a company that would become Netscape.
• Netscape's success caught major tech companies like Microsoft by surprise, forcing them to reorient towards internet technologies.

"Eventually you were talking about all the people on earth. The whole time he'd been stewing with Andreessen about what to do. The solution was right in front of him. The Internet."

This quote captures the moment Clark realized the vast potential of the internet as a platform for technology and business, leading to the creation of Netscape.

• Jim Clark had envisioned the telecomputer as a future technology hub, but it failed to materialize as expected.
• The industry's focus shifted from television sets to personal computers connected to the internet.
• Clark's early presentations to his board contained ideas that would later become foundational for the internet boom, such as e-commerce and email.
• Netscape's success demonstrated Clark's ability to anticipate and shape technological and economic shifts.

"Everyone at once realized that the next big thing was not the television set but the personal computer hooked up to the Internet."

This quote reflects the industry's pivotal shift in focus from the telecomputer concept to the internet, largely due to the influence and foresight of Jim Clark and Netscape.

• Clark ensured that the wealth from Netscape's success was distributed not just among financiers and CEOs, but also the engineers who contributed to the company's creation.
• He made sure that Mark Andreessen was well-compensated, avoiding the fate Clark had experienced with venture capitalists earlier in his career.
• The rapid wealth generation from Netscape created new dynamics of greed and fear in Silicon Valley.
• The success of Netscape at such an early stage contrasted with the slower financial success of established companies like Microsoft.

"An engineer who joined Netscape in July 1995 was by November worth $10 million."

This quote exemplifies the rapid wealth creation for Netscape employees and the company's impact on the culture of Silicon Valley.

• Clark believed in hiring individuals who were committed to changing the world, not just those seeking a new job.
• He used a strategy to discourage applicants who were not passionate by presenting the company as confused, while selling the vision to those he truly wanted to hire.
• Clark's approach to hiring was to seek out individuals who were deeply committed (pigs) rather than just interested (chickens).

"When they come by to apply for the job. I tell them, we're all confused here. We don't know what we're going to do yet, but when you find someone you want, I tell them, here's exactly what we are going to do, and it's going to be huge and you are going to get very rich."

This quote describes Clark's strategy for attracting and identifying the right kind of talent for his ventures, focusing on commitment and the potential for significant success.

• Clark's personality made him an outsider, even as an insider in the business world.
• His outsiderness provided him with a unique perspective, allowing him to see opportunities that others didn't.
• Clark's view of companies as self-contained worlds reflects his desire to create and control complete systems.

"Circumstance had made him an insider, but temperament kept him forever an outsider."

This quote illustrates the dichotomy of Clark's position in the tech industry, being an influential figure yet maintaining an outsider's perspective.

• Clark differentiated between two types of risk-takers, comparing them to pigs and chickens in a breakfast analogy.
• He emphasized the importance of having committed individuals (pigs) in any worthwhile endeavor.

"Clark liked to say that human beings, when they took risks, fell into one of two types, pigs or chickens. The difference between these two kinds of people, he'd say, is the difference between the pig and the chicken in the ham and eggs breakfast, the chicken is interested, the pig is committed."

This quote underlines Clark's belief in the significance of commitment over mere interest when it comes to taking risks and pursuing business ventures.

• Clark's investment in his third company, Healtheon, during a market downturn, demonstrated his confidence in the company's future.
• His willingness to invest personally influenced other venture capitalists to contribute funds, despite their initial valuation of the company as worthless.
• Clark's actions highlighted the mimetic nature of human behavior, especially in investment decisions.

"Their sense that Heltheon was worth very little. Ward with their fear that Jim Clark knew something they did not."

This quote captures the tension between the venture capitalists' valuation of Healtheon and their fear of missing out on a potentially successful investment, influenced by Clark's confidence.

• Jim Clark gained significant wealth from Netscape shares, allowing him financial freedom.
• Clark was willing to risk his wealth on ventures he believed in, contrasting with VCs' diversification strategy.
• Clark's conviction in his ability to make money led him to concentrate investments rather than spread them out.
• His approach was likened to betting all on "double zero" at a roulette table, which unnerved more conservative investors.
• Despite the potential for failure, VCs felt compelled to invest due to fear of missing out on "the new new thing."

He now sat on a billion dollars of netscape shares and could do whatever the hell he pleased with them. And what pleased him was to put it at great risk. The VCs did not care to make. These sort of colossal bets on the future. They sprinkled their money around a lot. Of different companies and counted on the law of averages to take care of the rest. Clark took a different approach. He said with some conviction, I know. How to make a lot of money. In the future, and since I know. How to make a lot of money. In the future, I'm going to put all my money on it.

The quotes highlight Clark's willingness to take significant risks with his wealth, differing from the venture capitalists' strategy of diversification. His confidence in his future financial success led him to concentrate his investments.

• Michael Lewis and Jim Clark's interaction with a Swiss bank illustrates Clark's unique perspective on financial risk.
• The standard financial advice and investment questionnaires did not resonate with Clark's approach.
• Clark's portfolio was heavily invested in volatile sectors like the Internet, showing his disregard for wealth preservation.
• His financial philosophy was to invest aggressively in new technologies, which was a common trait in Silicon Valley and contributed to its success.
• Clark viewed conventional financial strategies as a path to mediocrity and stability, which he equated.

And Clark's just like completely dumbfounded because. He just doesn't fit into this normal rubric. ... Finally, he looked up with the most perplexed expression. I think this is for a different person, he said. ... His life was dedicated to the fine art of tearing down and building anew. ... A year or so before, he had bought and sold a million shares in at home and made a quick $45 million. Other than that, he sank his wealth in his newest company and left it all there until the new new thing came into view.

These quotes illustrate Clark's difficulty fitting into traditional financial frameworks and his preference for investing in groundbreaking technologies. His investment strategy was focused on growth and innovation rather than diversification or wealth preservation.

• Clark's personal ambitions were not just financial; he sought to outdo others like Larry Ellison in terms of wealth.
• His goals continually evolved, with each achievement leading to a new target.
• Clark's motivations were driven by a desire to prove himself, often using past grievances as fuel.
• His dissatisfaction with the status quo spurred him to keep pushing boundaries and changing the world.
• Despite his success, Clark's restlessness and sense of perpetual challenge remained.

Then I'll stop. This was news. I pointed out that he had never before mentioned this ambition. I just want to have more money. Than Larry Ellison, he said again. ... That'll never happen. ... Grossman recalled, jim came into my office just before he left to start Netscape and said, sgi is okay, but I'd really like to have him $100 million back even further. Before he'd started silicon graphics, he had told Tom Davis that what he really wanted was to have $10 million.

These quotes reveal Clark's shifting financial targets and his competitive nature, particularly his desire to surpass Larry Ellison in wealth. His motivations were deeply personal and not solely based on financial success.

• The hosts express appreciation for Michael Lewis's writing and recommend his books, including "The Big Short."
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